PAPER NO.

71

E N V I R O N M E N TA L E C O N O M I C S S E R I E S

Environmental
Performance
Indicators

A Second Edition Note

Lisa Segnestam

October 1999
 THE WORLD BANK ENVIRONMENT DEPARTMENT

Environmental
Performance Indicators

A Second Edition Note

Lisa Segnestam

October 1999

Papers in this series are not formal publications of the World Bank. They are circulated to encourage thought and discussion. The use and
citation of this paper should take this into account. The views expressed are those of the authors and should not be attributed to the World
Bank. Copies are available from the Environment Department, The World Bank, Room MC-5-126.
Contents

ACKNOWLEDGMENTS v

EXECUTIVE SUMMARY vii

Chapter 1
Introduction 1

Chapter 2
Environmental Performance Indicators 3

Chapter 3
A Project Indicator Framework 5

Chapter 4
Selecting Environmental Performance Indicators 9

Chapter 5
Representative Environmental Areas 13
Forestry 13
Biodiversity 14
Land use 16
Air pollution 18
Water pollution 20
Global environmental problems 22
Institutional issues 23

Chapter 6
Summary 25

Annex 1 —
Matrix of Representative Environmental Performance Indicators 27

Annex 2 —
Examples of the Use of EPIs in World Bank Projects 31
Table A. Lithuania Siauliai Environment Project 32
Table B. Malawi Environmental Management Project 33

Environmental Economics Series iii

Environmental Performance Indicators — A Second Edition Note

Annex 3 —
Other World Bank Performance Indicators Notes 35

REFERENCES 37

BOXES
1 The use of performance indicators in natural resource management projects 3

2 Indicator typology—The Pressure-State-Response framework 5

Figure. The Pressure-State-Response model

3 Baselines, intermediate targets, and end targets—An example 11

Table. Indicators with baselines, intermediate targets, and end targets

4 Forest and Parks Protection Technical Assistance Project in Haiti 15

Table A. Output indicators and targets for a forest and parks protection project
Table B. Desired impact and indicators for a forest and parks protection project

5 The Cape Peninsula Biodiversity Conservation Project 17

Table. Indicators for a biodiversity conservation project

6 Natural resources management in Tunisia 18

Table. Indicators for a natural resources management project

7 Indicators of rural sustainability—An outlook for Central America 19

Table. Regional/National/Local indicators for land use and agriculture

8 Water and sanitation services in Gaza 21

Table. Indicators for a water and sanitation services project in Gaza

9 Institutional capacity in pollution control and abatement projects 24

Table. Indicators for institutional issues

FIGURES
1 Project and component-level indicators 7
2 A project’s contribution to overall environmental problems 7

iv Environment Department Papers

Acknowledgments

This note is an update and revision of an earlier Thanks are due to John Dixon, Ernst Lutz,
note published in 1996 that was prepared by Stefano Pagiola, Kirk Hamilton, Jan Bojö, and
John Dixon, Arundhati Kunte, and Stefano Aziz Bouzaher for useful comments and
Pagiola. This new edition was prepared by Lisa suggestions on a previous version of this note.
Segnestam. Please send comments and corrections
by e-mail to lsegnestam@worldbank.org or by
fax to (202) 522-1735.

Environmental Economics Series v

Executive Summary
The Performance Monitoring Indicators
Handbook (1996) discusses how to structure
indicators within a logical framework, how
performance monitoring indicators are
developed in general, how to link them to the
objectives of different levels, and how they
affect the World Bank’s work. This Second
Edition Note is part of a series of notes that are
meant to assist World Bank task managers in the
selection and design of performance indicators.
Following the structure introduced in the
Performance Monitoring Indicators Handbook,
this note discusses the design and the use of
environmental performance indicators (EPIs) to
assess and evaluate the performance of World
Bank projects in relation to environmental
issues.
Performance monitoring vis-à-vis the
environment is applicable to many types of
projects. Projects with primary or secondary
components that specifically address
environmental issues, as well as projects whose
activities may have a direct or indirect impact
on the environment, need environmental
performance indicators to evaluate their impact
on the environment—that is, to ensure that they
are having the desired positive impact, to
monitor any possible adverse impacts, and to
guard against unanticipated effects. Given the
diversity of environmental problems, the
variety of contexts in which they arise, and the
numerous possible solutions to them, no
“correct” set of indicators exists. This note is
designed to help the reader select indicators by
providing a framework and its application to
Environmental Economics Series
the major categories of environmental problems
normally encountered in the World Bank’s
work.
Indicator Framework. The framework used in this
note is based on the input-output-outcome-impact
model. While this approach distinguishes
between project outcomes and project impacts,
the format used in the guidelines for Project
Concept Papers or Project Appraisal Documents
bundles the two together.1 For this reason the
proposed framework speaks of “impact”
indicators, to facilitate the use of this note and
to allow for some of the ambiguities that arise in
practical situations. Moreover, the note does
not further present or discuss project inputs or
indicators relating to project inputs, since the
design of input indicators is already generally
well developed. Hence, the note discusses two
different levels of objectives and indicators: the
project’s overall objectives (e.g., reduction of
water-borne diseases or increased access to safe
drinking water) and the impact indicators that
measure and monitor these overall objectives,
and the project’s components (e.g., installation
of water monitoring stations) and the output
indicators that measure and monitor the output
of those components (e.g., the amount of water
monitored).
Selecting EPIs. There is no universal set of
indicators that is equally applicable in all cases.
The note discusses the major selection criteria
for choosing appropriate EPIs:
Direct relevance to project objectives. EPI
selection must be closely linked to project
vii
Environmental Performance Indicators — A Second Edition Note
objectives and the environmental problems
being addressed. Vague or overly broad
objectives such as “protecting biodiversity” are
of little use in selecting EPIs (and may well
indicate that the project or component itself is
not very well thought out). Where the
environmental impact is not the primary
objective, the Environmental Assessment (EA)
process can outline the potential impacts and
hence help select EPIs.
Limitation in number. A small set of well-
chosen indicators tends to be the most effective
approach.
Clarity in design. It is important to define the
indicators clearly in order to avoid confusion in
their development or interpretation and
maintain the distinction between output and
impact indicators.
Realistic collection or development costs. EPIs
must be practical and realistic, and their cost of
collection and development therefore need to be
considered. This may lead to trade-offs
between the information content of various
indicators and the cost of collecting them.
Clear identification of causal links. Causal
links must be clearly identified in order to
identify appropriate measures.
High quality and reliability. Indicators, and
the information they provide, are only as good
as the data from which they are derived. If the
“ideal” indicator to measure a problem is based
on unreliable data, it is common to depart from
the “ideal” indicator and use proxies instead.
Appropriate spatial and temporal scale.
Careful thought should be given to the
appropriate spatial and temporal scale of EPIs.
Since the environmental impact of project
activities seldom coincides with administrative
boundaries, EPIs often need to be measured on
viii
different scales. There might also be lags in
time before project effects are felt.
Targets and baselines. The goal of EPIs is to
monitor and evaluate the long-term
environmental effects arising from Bank-
supported activities. This implies a need to
measure the environmental problem at three
points in time: before the project begins (to
obtain baseline values), during project
implementation, and after the project has ended
(to compare baseline values to targets).
Interpreting EPIs. The interpretation of EPIs
varies across problems and indicators. Where
benchmarks exist (e.g., WHO safe drinking
water standards), indicators can be compared to
them. In many cases, the emphasis is on
variations in the indicator over time. The
appropriate comparison, however, is generally
to the counterfactual situation of what would
have happened in the absence of the project.
Interpretation can be hampered if appropriate
baseline information is not collected. Because
many EPIs vary substantially over time,
measurements over prolonged periods are often
necessary before trends can be ascertained. In
some cases, control groups can be used to
measure conditions in areas not affected by the
project; in others, statistical techniques need to
be used to predict what would have happened
without the project.
Representative environmental problems. Based on
this general discussion of selecting EPIs, the
note provides examples of EPIs in various broad
categories of environmental problems (forestry,
biodiversity, land quality, air pollution, water
pollution, global environmental problems, and
institutional issues) and discusses their
strengths and limitations and the conditions
under which they may be appropriate. In some
cases, such as air and water pollution,
appropriate indicators are well established and
already in widespread use. In other cases—
notably in the case of biodiversity and
Environment Department Papers

institutional capacity—there is much less
experience to draw upon. Examples are
presented in boxes, and, where possible,
reference is made to more comprehensive
documents which provide additional detail. A
matrix summarizes selected EPIs for each sector.
Note
1. The Project Concept Document (PCD) defines
the rationale for a proposed investment
Environmental Economics Series
Executive Summary
operation and the framework for its preparation,
and flags issues or areas of special concern to
the Bank. It serves as the basis for a Bank
decision to assist a borrower with project
preparation in the early stages of the project
cycle. The PCD later evolves into the Project
Appraisal Document (PAD).
ix

1 Introduction
In recent years, the World Bank has
substantially increased its lending portfolio for
environmental projects. Various safeguard
policies2 and other instruments have also been
developed to ensure that adverse environmental
impacts arising from Bank-supported activities
are minimized. Monitoring and evaluating both
positive and negative environmental impacts of
Bank-supported activities play an important
role in this process, and that is where
environmental performance indicators are
needed.
The Performance Monitoring Indicators
Handbook (1996) discusses how to structure
indicators within the logical framework, how
performance monitoring indicators are
developed in general, how to link them to the
objectives of different levels, and how they
affect the World Bank’s work. This Second
Edition Note is part of a series of notes meant to
assist World Bank task managers in the selection
and design of performance indicators.
Following the structure introduced in the
Performance Monitoring Indicators Handbook,
this note discusses the use of environmental
performance indicators (EPIs) to assess and
Environmental Economics Series
Introduction
evaluate the performance of World Bank
projects in relation to environmental issues.
Given the diversity of environmental problems
and of the projects causing them or designed to
address them, arriving at a set of ‘universal’
indicators applicable to all situations is not
feasible. Nor is it practical to develop an
exhaustive list of all possible indicators. This
note provides a framework and selection
criteria to assist World Bank task managers in
selecting appropriate indicators for their
projects and discusses issues that may arise in
doing so. In the second half of the note,
examples of EPIs in various broad categories of
environmental problems (forestry, biodiversity,
land quality, air and water pollution, global
environmental problems, and institutional
issues) are provided, along with a discussion of
their strengths and limitations and the
conditions under which they may be
appropriate.
Note
2. For example, World Bank Operational Policies
4.01, Environmental Assessment; and 4.04,
Natural Habitats.
1
 Environmental
2 Performance Indicators

Performance monitoring vis-à-vis the
environment is appropriate in projects of many
types and in many sectors. Some projects
address an environmental problem as their
primary emphasis (e.g., industrial pollution
management projects). Other projects may have
the environment as a secondary component
(e.g., a biodiversity conservation component in
a forestry project). Projects that do not include
any environmental components at all (e.g.,
infrastructure construction projects) may still
warrant monitoring of possible adverse effects
on the environment. For some projects that fit
into the latter category, such as education
projects, EPIs will not be relevant. In each
relevant case, EPIs are required to monitor and
evaluate the impact of the project—that is, to
ensure that the project is having the desired
positive impact, to monitor any possible
adverse impact, and to guard against
unanticipated effects. An analysis conducted in
1998 by the Environment Department on the
use of environmental performance indicators in
World Bank natural resource management
projects initiated between 1994 and 1996 found
that most projects use performance indicators,
even though there are still weaknesses in the
way they are applied (see Box 1).

Box 1
The use of performance indicators in natural resource management projects
In 1998 the Environment Department analyzed the use of performance indicators in World Bank natural re-
source management projects. Twenty-five projects were studied, including eight water resources projects, seven
forestry projects, two natural conservation projects, and eight rural poverty/natural resource management
projects.

All 25 projects included performance indicators in their Staff Appraisal Reports, which was somewhat surpris-
ing since all of them were prepared before performance indicators became mandatory within Bank operations.
Furthermore, all of the projects used indicators related to the objectives of the project or its components, al-
though, according to the SARs’ own terminology, only seven of the projects contained both output and impact
indicators—the latter being the most important from an environmental point of view. The study, however,
concludes that most projects do contain both output and impact indicators as defined in this note and in the
Performance Monitoring Indicators Handbook (1996).

With regard to the quality and monitorability of the indicators: i) more than half of the projects lacked baseline
values for comparison; ii) almost half of the projects (10 of 25) had 40 indicators or more to monitor project
results—an overwhelming number, even though many of those projects had ranked them in priority order;
and iii) many of the impact indicators, were vague in their definitions—usually as a result of the use of impre-
cise terms like “in an efficient manner” and “to be committed to.” On the positive side, most indicators were
not very complex and almost all were related to units of measurement, targets or values.
Source: T. Rossing Feldman 1998.

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Environmental Performance Indicators — A Second Edition Note

An indicator’s defining characteristic is that it the magnitude of a benefit is required to

quantifies and simplifies information in a
manner that facilitates understanding of
environmental problems by both decision
makers and the public. The goal is to assess
how project activities affect the direction of
change in environmental performance, and to
measure the magnitude of that change.
Indicators that allow a quantitative evaluation of
project impacts are particularly useful, since
they provide more information than just
whether the project is improving or degrading
the state of the environment. Information on
determine whether it is worth the resources
being expended to achieve it. Similarly,
information on the magnitude of adverse
impacts might indicate whether the harm is
justified given the other benefits of the activities
in question. Above all, an indicator must be
practical and realistic, given the many constraints
facing those who implement and monitor
projects. (See Chapter 4 for a more detailed
discussion of the criteria that are important to
take into account when selecting EPIs.)

4 Environment Department Papers

3 A Project Indicator Framework

Indicator frameworks provide the means to issues are interrelated. For national-level
structure sets of indicators in a manner that indicator sets, the OECD Pressure-State-
facilitates their interpretation. Frameworks can Response framework is widely used (see Box 2).
also aid the understanding of how different For project-level indicators, the project cycle

Box 2
Indicator typology—The Pressure-State-Response framework
The pressure-state-response framework (see Figure) was developed by the OECD in 1994 and can be applied at
the national, sectoral, community, or individual firm level.

The Pressure-State-Response model

In this framework, three different aspects of environmental problems are distinguished:

• The pressure variable describes the underlying cause of the problem. The pressure may be an existing prob-
lem (for example, soil erosion in cultivated uplands, or air pollution from buses) or it may be the result of a
new project or investment (for example, air pollution from a new thermal power plant, or loss of a mangrove
forest from port development).
(continued, next page)

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Environmental Performance Indicators — A Second Edition Note

Box 2 (continued)
Indicator typology—The Pressure-State-Response framework
• The state variable usually describes some physical, measurable characteristic of the environment that results
from the pressure. Ambient pollution levels of air or water are common state variables used in analyzing
pollution (for example, particulates concentrations in micrograms per m3 of air; BOD loads to measure water
pollution). For natural or renewable resources other measures are used: the extent of forest cover, the area
under protected status, the size of an animal population, or grazing density are all state variables.

• The response variables are those policies or investments that are introduced to solve the problem. Bank projects
that have important environmental components can be thought of as responses to environmental problems.
As such, they can affect the state either directly (for example, by installing pollution control equipment or by
creating protected areas) or indirectly, by acting on the pressures at work (for example, by providing alterna-
tive income sources for farmers who would otherwise clear forests).

A similar distinction can be made in the case of projects which have an adverse impact on the environment (for
example, port construction might have a direct effect by displacing natural areas and an indirect effect by
stimulating additional traffic and hence increased pollution). In some cases, projects also seek to improve the
responses to environmental problems (for example, by increasing the institutional capacity to monitor environ-
mental problems and enforce environmental laws).
Source: Adriaanse 1993.

itself can help to provide a framework. This
suggests the following classification of
indicators:
• Input indicators: monitor the project-specific
resources provided
• Output indicators: measure goods and
services provided by the project
• Outcome indicators: measure the immediate,
or short-term, results of project
implementation
• Impact indicators: monitor the longer-term or
more pervasive results of the project
project inputs. Input indicators are important in
tracking the implementation of projects and are
therefore key elements of project management.
However, their design is generally well
developed in the community of practitioners
and is therefore not emphasized in the
framework presented in this note. They are also
usually more straightforward in their design. In
comparison, output and impact indicators have
not been discussed to the same extent. New,
more easily understood approaches for
designing indicators of outputs and impacts are
therefore required.

Note that while the input-output-outcome-
impact approach distinguishes between project
outcomes and project impacts, the format used
in the guidelines intended to assist World Bank
task teams in preparing Project Concept
Documents or Project Appraisal Documents3 for
investment operations bundles the two together.
For this reason, the proposed framework refers
to “impact” indicators, including both outcome
and impact indicators. Moreover, this note does
not discuss project inputs or indicators relating to
The proposed framework is depicted in Figure 1.
In this framework, the project has both overall
project objectives it is designed to meet (e.g., an
increase in access to safe water) and components
by which the implementation of the project
proceeds (e.g., installation of water monitoring
stations). The implementation of these
components, combined in complex ways, leads
to the desired project impacts, but it may also
result in negative externalities, that is, adverse
environmental effects.

6 Environment Department Papers


Figure 1. Project and component-level indicators
Indicators are then developed for both the
overall project objectives and the components.
Impact indicators relate to the stated objectives of
the project (e.g., percent urban and/or rural
population with access to safe water), while
output indicators relate to the components (e.g.,
number of water monitoring stations that were
installed). The dotted lines in Figure 1 denote
the very important linkage between objective or
component and its corresponding indicator. In
the same way that the project components are
closely linked to the overall objectives of the
project, the output and impact indicators should
be related.
Figure 2. A project’s contribution to overall environmental problems
Environmental Economics Series
A Project Indicator Framework
The goal of EPIs is to monitor and evaluate
environmental impacts arising from Bank-
supported activities. Thus, indicators of both
impacts and component outputs are typically
required to properly evaluate the impact of
projects. Indicators of outputs alone are often
insufficient because the link between a given
output and the consequent impact on the
environment may be ambiguous or of unknown
magnitude. This can be illustrated by the two
panels in Figure 2, where the extent of an
emission reduction project’s potential impact on
the environmental problem of concern varies
greatly. For example, emissions from a given
7
Environmental Performance Indicators — A Second Edition Note
source may be responsible for the bulk of the
environmental problem (Figure 2a). In this case,
the link between the project output and overall
impact is clear and unambiguous. In other
situations (as seen in Figure 2b) the emission’s
share of the total environmental problem may
be relatively small and even a successfully
implemented project may not lead to significant
improvements in ambient concentrations. In
the former case (Figure 2a) an impact indicator
that measures ambient pollution levels is a
reasonably good proxy for the project’s impact.
In the latter case (Figure 2b), however, the link
is weak and the project’s success is best
measured by use of output indicators (with only
weak links to broader impact measures).
This point is important because it is the end
result that we are most concerned with. We care
about emissions primarily because they increase
ambient air pollution and hence health
8 Environment Department Papers
problems. Conversely, indicators of impact
alone are often insufficient because changes in
the condition of the environment depend on the
total effect of multiple pressures (and on
random factors such as weather). Unless the
project’s contribution to changes in
environmental conditions are measured, the
project might be incorrectly blamed for
problems it did not cause or credited for
improvements it did not help bring about.
Note
3. The Project Concept Paper (PCD) defines the
rationale for a proposed investment operation
and the framework for its preparation, and flags
issues or areas of special concern to the Bank. It
serves as the basis for a Bank decision to assist a
borrower with project preparation in the early
stages of the project cycle. The PCD later evolves
into the Project Appraisal Document (PAD).
 Selecting Environmental
4 Performance Indicators
No universal set of indicators exists which
would be equally applicable in all cases. This
section focuses on factors that must be borne in
mind by World Bank task managers and clients
in the countries when selecting EPIs for their
projects. Chapter 5 discusses various broad
categories of environmental problems, and
criteria for selecting appropriate indicators for
them.
The selection criteria discussed are:
• Direct relevance to project objectives
• Limitation in number
• Clarity of design
• Realistic collection or development costs
• Clear cause and effect links
• High quality and reliability
• Appropriate spatial and temporal scale
• Targets and baselines
Direct relevance to project objectives. The
process of selecting EPIs must start from a
precise understanding of the project’s objectives
and of the environmental problems being caused
or addressed. The selected indicators should
then be directly relevant to those objectives.
Where negative environmental impacts are by-
products of project activities, the Environmental
Assessment (EA) process can help to
understand the possible impacts and hence to
select EPIs.
Vague or overly broad objectives such as
“reducing erosion” or “protecting biodiversity”
are of little assistance in selecting EPIs (and may
Environmental Economics Series
well indicate that the project or component itself
is not very well thought out). Another reason to
select indicators that are as close to the project
objectives as possible is to simplify the
quantification of project benefits (or costs). This is
particularly true when the environmental aspect
of concern plays an important economic
function (for example, soil quality as an input to
agricultural production, water quality as an
input to agriculture, or fish production). For
example, in the case of land degradation, what
is most important is to measure the
degradation’s effect on achievable yield.
Indicators that measure various aspects
affecting the yield are therefore more useful
than indicators of, for example, soil depth. The
further the chosen indicator is from the
economic endpoint, the more difficult it will be
to evaluate the returns to the project.
Limitation in number. It is most effective to be
selective and use smaller sets of well-chosen
indicators. Using too many indicators risks
diluting their usefulness. Priorities may become
confused and the details may seem
overwhelming for both the developers and the
users.
Clarity in design. Since impact indicators are
linked to overall project objectives, which tend
to be fairly general, they may not be as specific
as component-level indicators. The output
indicators at the component level should be
detailed and relate to the specific results of the
project component. Ideally, this distinction
should be maintained in defining the impact
9
Environmental Performance Indicators — A Second Edition Note
and output indicators. In practice, there will be
projects where the structure is not so neatly
defined and these sorts of distinctions are not
easily made. It is, however, important that the
indicator is clearly defined to avoid confusion in
the development or interpretation.
Realistic collection or development costs. EPIs
must be practical and realistic, and their cost of
collection and development therefore need to be
considered. This may lead to trade-offs between
the informational content of various indicators
and the cost of collecting them. These trade-offs
will obviously vary across technologies and
depend heavily on institutional capacity.
Certain indicators may be extremely simple or
inexpensive to collect, but inadequate for
various reasons. For example, forest cover is
simple to measure from aerial photographs or
by using remote sensing techniques, but it is a
poor indicator of the condition of forests, and an
even poorer indicator of the condition of natural
habitats. More precise indicators may be much
more difficult or expensive to collect, however.
Sometimes it is possible to supplement coarser
indicators with one-time studies that establish
the relationship between them and the desired
indicator. One way of deciding which indicator
to collect or develop is therefore to compare the
costs of collection/development to the benefits
of the increased information to be contributed
by the indicator.
Clear identification of causal links. The causal
links must be clearly identified in order to
design appropriate measures. For example, in
the forest sector, observing the rate of
deforestation alone provides an incomplete
picture. If this information is supplemented
with an indicator of incentives for forest
clearing (for example land ownership policies),
one is getting closer to the underlying cause of
the problem.
The case of air pollution provides another
example of the difficulties in establishing clear
10
cause and effect links. Ideally, the project’s
impact on morbidity and mortality would be
measured, since reducing them is generally the
intended outcome. Morbidity and mortality
themselves can be measured relatively easily,
and most researchers agree that air pollution
has adverse effects on health. But establishing a
clear link between morbidity or mortality and
any given source of emissions (an output
indicator) remains extremely difficult, despite
recent progress in this area (Ostro 1994, Cropper
and others 1997, Eskeland and Xie 1998). In
most such cases, the only feasible solution is to
fall back on indicators of ambient
concentrations or, if the source has been
established as contributing significantly to total
pollution, of emissions.
High quality and reliability. Indicators, and the
information they provide, are only as good as
the data from which they are derived. Ideally,
an indicator should represent a reliable
measure, that is, it should have a sound
scientific basis. However, if the “ideal” indicator
is not available (e.g., because of data problems
or questions of reliability), a second-best proxy
is often used.
Appropriate spatial and temporal scale. Project
activities may have an impact far beyond the area
in which the project is active. There may also be
lags in time before project effects are felt and
noticed. Changes in the long-term status of
biodiversity, for example, often only manifest
themselves over time periods much longer than
typical Bank projects. Where feasible, it is
therefore highly desirable that the selected
indicators take into account the appropriate
spatial and temporal scale.
Targets and baselines. The goal of EPIs is to
monitor and evaluate the long-term
environmental effects arising from Bank-
supported activities. This implies a need to
measure the environmental problem at three
points in time (see Box 3 for an example):
Environment Department Papers
 Selecting Environmental Performance Indicators

Box 3
Baselines, intermediate targets, and end targets—An example
This sewerage and reuse project in the Republic of Tunisia will assist the government in: (a) improving service
levels of urban sewerage up to the average level of potable water service; (b) promoting efficient reuse of
effluent from sewage treatment plants for agricultural purposes; (c) reducing urban and coastal pollution; (d)
improving Office Nationale de l’Assainissement (ONAS) cost recovery and financial capacity, with the long-term
objective of making it more autonomous and self-financing; (e) introducing appropriate new sewage treatment
technology; (f) providing technical assistance to develop private sector participation in the sewerage sector;
and (g) acquiring environmental monitoring and management equipment, tools, and studies.

In order to measure the project’s performance in relation to the above-mentioned objectives, a number of indi-
cators have been proposed. Furthermore, baselines, intermediate targets, and end targets have been included
for all of the indicators. The Table presents a selection of the indicators.

Indicators with baselines, intermediate targets, and end targets

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A. Baseline levels of the indicators establish pre-
project conditions, which is crucial for the
interpretation of the indicators after project
completion.
B. The project’s contribution to a change in
environmental performance, both directly
and indirectly, must be measured when the
project is ongoing so that there is time to
modify the project design if the contribution
is negative or not as positive as anticipated.
On occasions, it may be possible to identify
intermediate targets. Indicators should be
selected that can measure whether or not
the intermediate targets have been reached.
Environmental Economics Series
 
  
 
C. For most indicators it is desirable to have
specified end targets, against which the final
results of the project are measured. The lags
in time that may occur before the effects are
felt need to be taken into account when
assessing whether or not the targets have
been reached.
After selecting and measuring indicators it is
still necessary to interpret them. The absolute
level of the indicator can serve as a diagnostic
tool during project implementation, as long as
there exists a benchmark to which the value can
be compared (e.g., safe drinking water
standards from the WHO or the US EPA). The
11
Environmental Performance Indicators — A Second Edition Note

appropriate comparison, however, is generally
not to the pre-project situation but to the
counterfactual situation of what would have
happened in the absence of the project. Even an
increase in emissions may be considered
evidence of success if they would have
increased even more had the project not been
implemented. In some cases, control groups can
be used to measure conditions in areas not
affected by the project. In others, modeling
techniques should be used to predict what
would have happened without the project.

12 Environment Department Papers

 Representative
5 Environmental Areas
This section provides some examples of EPIs
used in the major categories of environmental
problems normally encountered in World Bank
work: air and water pollution, changes in
natural resources such as forests, water and
biodiversity, global environmental concerns
(specifically greenhouse gas emissions and
protection of the ozone layer), and institutional
problems.4 The level of specificity varies across
sectors. In some cases, such as air and water
pollution, widely accepted norms exist on
which indicators to measure and how to
measure them. In others, notably biodiversity
and institutional development, indicators are
much more difficult to define and experience in
using them is limited.
The discussions in this section are not meant to
be exhaustive or to serve as step-by-step guides
to indicator selection. In several cases, more
extensive guidelines have been compiled and
should be consulted more detailed
recommendations. Examples of EPIs from some
sectors are given in the boxes within this section
as well as in Annex 1, where more general
examples from each sector are brought together.
For two examples on how to select and design
EPIs for projects, see Annex 2, where an
environmental project in Lithuania and an
environment management project in Malawi are
presented. For more examples on environmental
indicators, World Bank task managers are
encouraged to go to the Environmental
Economics and Indicators Web site,5 where lists
of indicators for each of the areas discussed
below as well as for mineral resources, coastal
Environmental Economics Series
and marine resources, fisheries, solid waste and
hazardous waste/toxic chemical can be found.
Forestry
Forest conservation, forest management, and
the impact of deforestation are worldwide
concerns that have long been of interest to the
World Bank. The Bank’s objectives for the
forestry sector, as articulated in the 1991 Forest
Policy paper (World Bank, 1991) and the
Operational Policy series (OP 4.36 Forestry),6
are to promote the sustainable and
conservation-oriented management of forest
resources and forest lands to meet the needs of
both present and future generations, giving
particular attention to the needs of the rural
poor. To achieve these objectives, the policy
statements suggest nine specific aims to guide
Bank involvement in the sector. Of these, three
are clearly environmental management objectives:
reduction of deforestation; preservation of intact
forest areas; and enhancement of the
environmental contribution of forested areas
(key areas here include watershed protection,
carbon sequestration, biodiversity conservation,
wildlife conservation, and social amenity). A
further two have important environmental
dimensions: ensuring appropriate policy and
institutional settings for sustainable forest and
conservation-oriented forest management; and
support for international efforts to promote
forest conservation and sustainable forest
management.
Management projects for forests may have
several different objectives, such as timber
13
Environmental Performance Indicators — A Second Edition Note
production, watershed management, carbon
sequestration, non-timber forest benefits, and
biodiversity. In developing an indicator set it is
important to consider the project goals. For
example, an indicator such as deforestation rate
can give a good first cut at identifying areas
with significant pressures on forests. Once these
areas have been identified, a more detailed
understanding of the specific circumstances is
necessary to develop appropriate project
interventions. These will differ, for example, if
population exerts pressure on forests to meet
fuelwood needs or by clearing areas for
agricultural use. The broad indicators of impact
can then be supplemented by specific indicators
which monitor how the project’s interventions
are working (e.g., rates of adoption of stoves or
area served by rural electrification, for a project
designed to alleviate demand for fuelwood).
Measures of remaining forest cover and the rate
at which it is being lost would then indicate
whether the intervention is successful not just
on its own terms but also in terms of meeting
sectoral objectives.
Box 4 provides an example of a forest and parks
protection project in Haiti that uses EPIs for the
monitoring and evaluation of the project.
Further examples of EPIs that might be used in
forestry projects are presented in the matrix in
Annex 1. Forestry indicators are discussed
further in “Performance Indicators in Bank-
Financed Agricultural Projects” (AGRAF 1995).
Biodiversity
Biodiversity conservation is a fundamental
requirement for sustainable development
because species extinction and irreversible
losses of ecosystems or genetic diversity within
species compromise the future options of both
present and future generations. Biodiversity is
commonly defined as three different levels;
genetic (diversity within species), species (change
in number of species and population size), and
ecosystem (changes in natural habitats). Each
14
level is influenced by three types of pressures:
physical (e.g., habitat alteration); chemical (e.g.,
exposure to contaminants); and biological (e.g.,
release of alien species, and fishing). The
selection of EPIs is dependent on the
combinations among these levels and pressures.
Under the Bank’s existing Forest Policy and the
proposed Operational Policy on Natural
Habitats, the Bank adopts, and expects its
borrowers to adopt, a precautionary approach
to natural resource management to protect
biodiversity and other key environmental
values. Despite the high level of uncertainty
associated with conservation management,
there is a strong conceptual understanding of
both the threats to biodiversity and the key
resource management requirements for
biodiversity conservation, which is backed by
considerable resource management experience
in applying these concepts. This understanding
suggests a number of overall goals that
activities having an impact on biodiversity
should aim for. Performance indicators can be
developed for each of these broad goals, which
they would then need to be supplemented by
additional indicators tailored to the project’s
specific objectives and to the interventions
carried out under it.
Habitat conservation is one of the most important
goals, since habitat destruction has been
identified as the most significant threat to
mammal and bird populations. Habitat
destruction in turn is largely driven by human
activity that results in disturbance or over-
exploitation of natural habitats through
activities such as logging or hunting or through
land-use change for agriculture, infrastructure
development, or human settlement. A number
of indicators can be used to monitor the impact
on natural habitats. “Monitoring and Evaluation
Guidelines for Biodiversity Projects” (1997)
discusses the difference between “measuring
biodiversity values of an area and monitoring
the impact of management of biodiversity.” This
Environment Department Papers
 Representative Environmental Areas

Box 4
Forest and Parks Protection Technical Assistance Project in Haiti
In response to the Haitian Government’s strategy, the overall objective of this project is to start the initial phase
of intervention for the protection of critical remnants of Haiti’s forest ecosystems and for slowing the pace of
degradation of Haiti’s natural resources. The project is planned to establish the institutional, policy and finan-
cial foundation for the Government of Haiti to sustain protection of critical ecosystems on a nation-wide basis.
The three specific objectives of the project are to: (a) provide institutional support for strengthening the
Government’s institutional capacity to develop, monitor and enforce a national forest and parks protection
system; (b) initiate key activities to protect and manage the La Visite and Pic Macaya National Parks and the
Pine Forest National Forest Reserve, and; (c) reduce pressure on the above-mentioned protected areas by in-
creasing on-farm productivity and off-farm employment options conserving natural resources, and enhancing
the management capacity of local organizations in the buffer areas of the three targeted areas. The project
components are listed in Table A and Table B below.

The overall performance of the project is being monitored, primarily based on a set of performance indicators
for each of the individual components. The project documents have divided the indicators into performance
indicators and impact indicators. Table A lists the output indicators together with the corresponding targets.
The impact indicators have not been compared to any targets, but instead to a so-called “desired impact.” This
is shown in Table B.

Table A. Output indicators and targets for a forest and parks protection project
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Table B. Desired impact and indicators for a forest and parks protection project
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Source: World Bank 1996b.

Environmental Economics Series 15

Environmental Performance Indicators — A Second Edition Note
distinction is normally very important to make
since many of the indicators that are commonly
listed as biodiversity indicators measure values,
but do not indicate the reason for the change in
value. One example cited in the publication is
the number of species threatened with
extinction. While this indicator can be used for
comparison between different areas, it cannot be
used to interpret a change. If the number
decreases it can be because: i) the threatened
species have recovered, ii) some of them have
become locally extinct, or iii) all of the originally
threatened species are now extinct and a smaller
number of new species are now threatened
instead. It is important, therefore, to consider
the project specifics, such as adjacent areas,
areas required to sustain different species
(number of species is not enough. One also needs
information on which types of species are of
concern), spatial and time scale effects, and
other aspects.
Special attention needs to be devoted to
identifying and monitoring the state of critical
natural habitats, that is, sites that are vital for
the continued viability of important species. The
establishment and maintenance of effective,
representative protected areas are important
both in terms of ensuring the conservation of
ecosystem diversity and as a tool to conserve
specific habitats. Many indicators of the state of
habitats and pressures upon them remain
relevant to this objective. In addition, indicators
can be developed to monitor protected areas per
se. For example, change in the proportion of
critical natural habitats in protected areas might
indicate the adequacy of the current system of
protected areas. For an example of indicators for
a biodiversity conservation project, see Box 5.
The matrix in Annex 1 provides several
examples of EPIs that can be used in projects
affecting biodiversity. Biodiversity indicators
are discussed further in the Bank’s “Monitoring
and Evaluation Guidelines for Biodiversity
Projects” (1997), as well as in “Guidelines for
16
Monitoring and Evaluation for Biodiversity
Projects” (World Bank 1998a).
Land use
Since 1945, an estimated 1.2 billion hectares of
land have been moderately or strongly
degraded worldwide as a result of human
activity, implying that productivity has been
significantly reduced. Human activities can
produce a diverse range of both harmful and
beneficial impacts on the quality of land.
Agriculture is one example; while it can lead to
soil erosion, salination of soils through
irrigation, and nutrient depletion, it may also
act as a sink for greenhouse gases, and prevent
flooding and landslides if practices are sound.
Agriculture may also affect the conservation of
biodiversity and landscapes. For example, the
species level may be affected by excessive use of
nutrients and pesticides, and by “domesticated”
species affecting the number, population and
distribution of species in natural habitats
(thereby affecting the ecosystem level).7
The effects on the environment of land use
projects are usually complex. They can differ
depending on, for example:
• The technology, management practices
used, and other aspects that impose or
reduce pressure on the land
• The policy environment in the country
• The type and quality of the land
• The location of the project.
The selected indicators must therefore take
these site-specific attributes into consideration
in order to measure the proper effects of the
project. Indicators of land use should measure
the quality of land resources, changes in the
capability of land to produce desired goods and
services, and the existence of negative external
impacts due to patterns of land management
systems. They should also provide information
about pressures exerted on land resources
through land management systems, changes in
Environment Department Papers
 Representative Environmental Areas

Box 5
The Cape Peninsula Biodiversity Conservation Project
South Africa ranks as the third most biologically diverse country in the world. The Cape Peninsula Biodiversity
Conservation Project has as its development objectives to ensure rehabilitation and sustainable protection of
the globally significant flora and related fauna of the Cape Peninsula, including surrounding marine ecosys-
tems, and to initiate conservation planning and conservation activities for the entire Cape Floral Kingdom.

In order to achieve its sustainable development and global environmental objective of better conserving and
sustainably using the unique biodiversity of the Cape Peninsula and the Cape Floral Kingdom, this project
will: (i) facilitate the establishment and strengthen initial management of a new Cape Peninsula National Park,
the area of which roughly corresponds to the current Cape Peninsula Protected Natural Environment; (ii)
expand NGO-managed community-based conservation activities in support of the new national park and
throughout the Cape Floral Kingdom by supplementing the capital resources of the Table Mountain Fund; and
(iii) support the preparation of the first comprehensive conservation strategy for the entire Cape Floral King-
dom. The Table below lists a selection of the indicators presented in the Project Appraisal Document.

Indicators for a biodiversity conservation project

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the state of land quality over time, and societal
responses to pressures on, and changes in the
state of, land quality. For an example of
indicators for land use and other natural
resource management aspects, see Box 6.
An effort is underway within the Bank and in
close collaboration with UNDP, FAO, and UNEP
to develop land quality indicators (LQI) that can
be used to assess many of these aspects.8
Furthermore, the Bank is involved in a regional

Environmental Economics Series 17

Environmental Performance Indicators — A Second Edition Note

Box 6
Natural resources management in Tunisia
The indicators presented in the Table below are used as performance indicators in a natural resources manage-
ment project in Tunisia. The project’s objectives are sustainable natural resources management, in particular of
crop and range land in severely degraded zones, and agricultural productivity improvements, attained with
greater involvement of resource users.

More specifically, the project’s components are Participatory Development Plans, Soil and Water Conserva-
tion, Rehabilitation and Development of Small-Scale Irrigation Systems, Agriculture and Rangeland Develop-
ment, Rural Infrastructure, Women’s Support Activities, and Institutional Strengthening.

Indicators for a natural resources management project

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Source: World Bank 1997b, Hamilton 1998.
project, initiated and managed by the
International Center for Tropical Agriculture
(CIAT) in Colombia, which is designed to
develop rural sustainability indicators for
improved decision-making (see Box 7).
Air pollution
Declining air quality can have adverse impacts
on human health. Air pollution can also
adversely affect economic activity (e.g., through
18
WRPDWRHVWKD
damage to agricultural crops or structures) and
the amenity value of the environment (e.g.,
through damage to forests and reduced
visibility). There are an increasing number of
sources of pollution: energy and fuel use,
vehicular emissions, and industrial production.
In most urban industrial areas, the origin of
unacceptably high levels of air pollution can
generally be traced to industry, transport,
domestic fuel use, and the combustion of fossil
Environment Department Papers
 Representative Environmental Areas

Box 7
Indicators of rural sustainability—An outlook for Central America
This project is intended to respond to the specific requirements of the Latin American and Caribbean region.
The objective is to develop a regional approach to indicators and information, which would allow integration
and harmonization with global and international initiatives, and to make the indicators accessible to decision
makers at local, national and regional levels.

Several of the indicators would be most useful at a more aggregated level than project level (i.e., the national or
regional level), while others could be used at either a project level or a more aggregated one. The spatial and
temporal effects of a project may, however, call for indicators at both levels. Hence, where feasible, it is highly
desirable that local/project level indicators be comparable to regional- or national level indicators. The Table
below presents examples of the indicators proposed for land use and agriculture.

Regional/National/Local indicators for land use and agriculture

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fuels. Additionally, there exist natural sources
such as windblown dust, pollen, forest fires, and
volcanoes. The primary focus is on emissions
from human activity since little can be done
about natural factors.
There are a wide variety of pollutants of
concern from the point of view of health and
environmental impacts. A number of site-
specific studies have examined pollution risks.
Although results vary, there are some important
consistent findings:
• Health problems have typically been
associated with indoor pollution and
airborne particulates—measures of which
include Total Suspended Particulates (TSP)
and, for the more damaging smaller size
particles, PM10 and smaller—and ambient
lead
• Damage to structures, forests, and
agricultural crops tend to be primarily
linked with SO2 and ground-level ozone.
Information on appropriate procedures for
monitoring these indicators is readily available.

Environmental Economics Series 19

Environmental Performance Indicators — A Second Edition Note
Similar measures are used for both outputs and
impacts, depending on whether emissions or
ambient levels are being measured. Although
monitoring data on pollutant generation is not
readily available, information can be culled
from other sources. The World Bank has
developed some interim techniques to arrive at
estimates of emissions, namely, the Decision
Support System for Industrial Pollution Control
(DSS/IPC) and the Industrial Pollution
Projection System (IPPS). The emissions
estimates are derived from assumed emissions
factors (pollutant emission per unit of output)
for different economic activities.
Even though the ultimate objective of a project
is to mitigate damage to human health,
monitoring such effects directly is extremely
difficult because of substantial uncertainties
over the exposure of different population
groups to pollutants, their response to different
levels of exposure, and the cumulative nature of
damage. It is common, therefore, to fall back on
monitoring indicators of ambient concentrations
or of emissions to gauge a project’s impact.
These indicators can be quite useful as long as
prior research has established the causal links.
The matrix in Annex 1 lists the most commonly
used indicators of air pollution, which may
need to be supplemented by additional EPIs
depending on local conditions, as discussed
above. Additional details and discussion can be
found in documents on the Industrial Pollution
Projection System (Hettige and others 1995) and
in the Pollution Prevention and Abatement
Handbook 1998: Toward Cleaner Production (World
Bank 1999).
Water pollution
The contamination of surface waters from faecal
discharge due to inadequate sewage networks
and waste treatment facilities in urban areas is a
major environmental problem in many
countries. Surface and ground water pollution
20
from the industrial and agricultural sectors and
high levels of salinity are other significant
problems. Acidification of surface waters from
air pollution is a more recent phenomenon and
can be a threat to aquatic life.
Water pollution is of concern for two main
reasons. Perhaps the most important is the
potential for serious health problems: water
pollution has been associated with outbreaks of
waterborne diseases such as cholera and gastro-
enteric diseases. The impact of water pollution
on health can be either direct, through
consumption of contaminated water, or indirect,
through bio-accumulation of contaminants in
fish. The other main reason for concern is the
effect of water pollution on the productivity of
water-based economic activities such as
fisheries and irrigation.
Understanding of the impact of water quality
on human health and aquatic life has improved
enormously in recent years. Four broad
measures of water quality have come to be
widely used and are listed in the matrix in
Annex 1:
• Faecal coliform concentration
• Biological Oxygen Demand (BOD)
• Chemical Oxygen Demand (COD)
• Heavy metals concentration.
These indicators can generally be used as either
output or impact indicators, depending on where
measurements are taken. Used together, they
provide a very good picture of the overall
health of the water body or of the threats to it.
In some cases, however, some of these
indicators may not be applicable and can be
omitted (e.g., heavy metal contamination may
not be a factor if there is no industry).
Conversely, these indicators may have to be
supplemented by additional indicators that
measure more precisely the effects that the
project is having (e.g., contamination by specific
pollutants likely to be associated with project
Environment Department Papers
 Representative Environmental Areas

activities, such as pesticides and fertilizers in an
agricultural project).
The procedures required for measurement of
water quality indicators are problem-specific
but are generally well understood. Sampling
methods differ depending on whether the water
body of interest is a lake or a stream. Timing of
measurements is often an issue, since
concentrations can vary substantially as the
waterflow varies; a given pollutant may cause
few problems when waterflow is at its peak but
have a major impact at times of low waterflow.
Interpretation of results can be undertaken in a
number of ways, depending on the specific
objective to be achieved. Institutions such as
WHO or the US EPA have developed standards
for drinking water quality, for example,
although their applicability to developing
countries is sometimes questioned. For an
example of selected indicators for water
pollution, see Box 8.

Box 8
Water and sanitation services in Gaza
The project is designed within the framework of a program addressing the priority needs for the West Bank
and Gaza (WBG) as originally defined in the water and wastewater component of the three-year Emergency
Assistance Program. The objective of the program is to improve the quality, quantity and management of water
and wastewater services in the WBG. It includes equipment procurement; upgrading and extension of munici-
pal water supply networks; rehabilitation, extension and construction of municipal storm-water and sewerage
networks; improvement of village water distribution and related programs; the drilling of new wells; and
improving management of water and wastewater services.

For Gaza, the program includes: (a) the provision of an International Operator to implement a Service Im-
provement Program together with the provision of operating capital for the Operator; (b) finance for invest-
ment in rehabilitation projects and provision of additional water and wastewater facilities in areas where they
are most urgently required (through bilateral funding); and (c) Technical Assistance (TA) and Institutional
Capacity Development.

The indicators proposed to measure the project’s performance are listed in the Table below.

Indicators for a water and sanitation services project in Gaza

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Source: World Bank 1996c, Hamilton 1998.

Environmental Economics Series 21

Environmental Performance Indicators — A Second Edition Note
Global environmental problems
Measuring the impact of projects on global
environmental problems such as climate
changes or damage to stratospheric ozone
encounters significant scale problems. No single
project is likely to have any measurable impact
on these problems. Measuring the impact of a
problem, therefore, does not generally fall
within the scope of project-level monitoring.
Measuring the outputs of a project is feasible,
however (and is required under OP10.04).
Climate change. Climate change is linked to a
number of important effects on the global life-
support system: sea level rise is just one of the
most dramatic potential impacts; major shifts in
primary agricultural production areas are
another. The main greenhouse gases (GHG)
generated by human activity are CO2, methane,
and nitrous oxide. The degree to which these
GHGs affect climate change depends on their
concentrations in the atmosphere and their
ability to absorb heat, also known as the global
warming potential. For instance, the global
warming potential of methane is said to be 25–
30 times that of an equivalent amount of CO2
(IPCC 1994). Concern for GHG emissions and
climate change is usually expressed in terms of
either reducing new emissions or off-setting
emissions by reductions elsewhere on the planet
(for example, carbon sequestration and carbon
offsets).
Although monitoring global climatic effects is
impractical at the project level, emissions of
GHGs give an indication of the impacts being
generated. These emissions can either be
measured directly (if the project involves
interventions in major producers of GHGs such
as thermal power plants) or estimated from the
project’s impact on economic activity (using
emissions factors by activity). In either case,
baseline data on pre-project emission levels will
be required. The most commonly used indicator
in this area is some measure of carbon emissions
22
(or other gases that contribute to global
warming) or a measure of the percent reduction
in carbon emissions from some base scenario.
When multiple GHGs are involved, the global
warming potential can be used as a weighting
factor.
Stratospheric ozone. The ozone layer blocks
ultra-violet radiation that is harmful to humans
and all living resources. The degeneration of the
ozone layer is precipitated by the existence of
ozone-depleting substances (ODSs) such as
chlorofluorocarbons (CFCs) and halons. The
effect of these substances depends on their
concentrations in the atmosphere and their
ability to break down ozone. The latter is
referred to as the ozone-depleting potential.
While the production of ODSs itself does not
damage the ozone layer, the subsequent use of
these substances and their release into the
atmosphere results in damage to the ozone
layer. Substitutes with zero or near zero ozone-
depleting potential are being developed.
Here too, monitoring global effects is
impractical and work therefore focuses on
measuring changes in outputs from project
activities. The consumption and hence
emissions of ODS can be used as a measure of
the outputs being generated by economic
agents. At the national level, monitoring
production, net of exports and adding imports,
can be taken as a proxy for the country’s
contribution to the problem. At the project level,
the project’s contribution to national production
and consumption can be used as a proxy.
Different ODSs can be weighted by their ozone-
depleting potentials to arrive at a composite
measure of the impact of any given reduction of
ODS. Many countries have committed
themselves to phasing out ODSs and replacing
them with substances with low or zero ozone-
depleting potential. The ratio of ODS
consumption to production, relative to a
baseline and, where relevant, to a target, should
also be monitored.
Environment Department Papers
 Representative Environmental Areas

The matrix in Annex 1 provides several
examples of output indicators for global
environmental problems; no impact indicators
are provided, since it is unrealistic to hope to
link any specific project with changes in the
state of global problems. Additional details on
climate change and ozone depletion problems
can be found in publications of the Environment
Department (World Bank 1995b and 1995c, and
Martinot 1998).
environmental matters (e.g., by looking at the
number of staff in environmental agencies or
examining environmental expenses as a
percentage of the government budget). Both
these types of indicators must be used with
considerable caution, however. Institutional
development is as much about quality as it is
about quantity, so numerical or presence/
absence indicators alone can be very
misleading.

Institutional issues There are several problems with these so- called
“commitment” indicators. For example, having
The success of environmental policy initiatives
a biodiversity strategy is only the first step.
is contingent on a well-functioning network of
Next, the strategy needs to be implemented.
institutions that can support the formulation,
Finally, it must have a positive effect on
implementation, and regulation of
biodiversity. Enforcement efforts will be
environmental objectives. In many of the Bank’s
ineffective unless the enabling frameworks and
client countries such support systems are either
capability are in place. Good qualitative
non-existent or embryonic. Capacity-building
knowledge of local conditions is indispensable
initiatives, therefore, are one of the most
if the indicators are to be properly interpreted.
important and challenging areas for
A problem with qualitative as opposed to
environmental lending. These efforts can have a
quantitative indicators is the difficulty in
far-reaching impact, since they form the
standardizing them so as to allow meaningful
foundation for integrating environmental
analyses of changes over time.
concerns into mainstream policy development.
The stronger the institutional framework, the
Institutional issues are not solely about the
better and more timely the response to
existence and capacity of governmental
environmental problems is likely to be,
institutions. In many cases, public attitudes
independent of any assistance the Bank may be
towards environmental problems are crucial,
able to furnish through specific projects. To
since most decisions about matters affecting the
date, however, the success in environmental
environment are ultimately taken by individual
institutional development has been mixed.
agents such as farmers, industrial producers,
and consumers. In addition, public attitudes
The major performance indicators for
towards various types of environmental
institutional development can be grouped in
services are critical to valuing these services
four broad areas: legal framework, institutional
correctly. For example, the evolution of public
framework, staff development, and technical
attitudes can be monitored through opinion
capability. In some cases, indicators simply note
surveys. The number and membership of active
the presence or absence of particular features,
environmental NGOs also gives an indication of
such as laws or agencies dealing with specific
public attitudes. For some examples of
environmental problems. Other indicators
institutional indicators, see Box 9.
attempt to quantify the effort devoted to

Environmental Economics Series 23

Environmental Performance Indicators — A Second Edition Note

Box 9
Institutional capacity in pollution control and abatement projects
This box presents indicators used in two different projects: a pollution abatement project in the Arab Republic
of Egypt and an industrial pollution control project in the Democratic and Popular Republic of Algeria. Both
projects have as their broad objective to assist the Government in reducing industrial pollution causing ad-
verse health effects and/or ecological degradation. The projects consist of two main components:

• A technical and institutional support component that would provide technical assistance, studies, training,
monitoring and pollution control equipment, and field vehicles to support sub-components (for example to
strengthen the technical and administrative capacity of regional branches)
• An investment component. For one of the projects this component consists of a Pollution Abatement Fund
that will provide financing for environmental investment in public and private enterprises. For the other
project it covers environmental investments in a fertilizer complex and in an iron and steel complex.

Examples of the proposed indicators are presented in the table below.

Indicators for institutional issues

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Source: Hamilton 1998.

Notes
4. Some areas are not covered by this note (for
example, water management) since separate
performance indicator notes have been compiled
for those. For other areas (for example, coastal
and marine resources, fisheries, mineral
resources, solid and hazardous waste, and toxic
chemicals) the experience is still too limited to
be discussed in any detailed way.
5. http://www-esd.worldbank.org/eei.
6. The forest policy is being reviewed during the
fall of 1998. The revised policy and a new
strategy are scheduled to be completed before
the end of FY00.
7. For a more detailed discussion on agriculture
and environmental indicators, see OECD (1997).
8. For more information on the Land Quality
Indicators Program, please see
http://www.ciesin.org/lw-kmn/.

24 Environment Department Papers

6 Summary
Selecting appropriate Environmental
Performance Indicators to assess and evaluate
the performance of World Bank projects in
relation to environmental issues is a complex
task. It is probably neither possible nor
desirable to develop a small set of ‘universal’
indicators. For projects with explicit
environmental objectives, these objectives give
concrete guidance to the identification of
appropriate EPIs. In other cases, the EA process
serves as a guide to selection of EPIs in cases
where environmental impacts are unintended or
indirect. Once the areas to be monitored have
been identified, specific indicators can be
selected to monitor how the project is affecting
the pressures on the environment and the end
result of these pressures. Where possible, it is
desirable to select indicators that will be
comparable to broader measures of
environmental health, or comparable across
projects.
This note discusses specifically output and
impact indicators. The first category can be
Environmental Economics Series
defined as indicators that measure goods and
services provided by the project, while the latter
measure the immediate, or short-term, and
longer-term or more pervasive results of project
implementation. The output indicators should
relate to the components of the project and the
impact indicators to the stated objectives of the
project. Which indicators to select for a project is
determined by a series of selection criteria of
which the direct relevance to project objectives,
limitation in number and clarity in the design of
indicators selected, and realistic costs of
collection or development are among the most
important. These, as well as other selection
criteria are discussed in the note. Furthermore,
the specific characteristics of the environmental
area that one wishes to measure and monitor
are relevant in the choice of indicators. This note
analyzes some of these characteristics for a
number of representative environmental areas:
forestry, biodiversity, land use, air pollution,
water pollution, global environmental
problems, and institutional issues.
25
Annex 1 —
Matrix of Representative
Environmental Performance Indicators
This table provides some examples of EPIs used
in the major categories of environmental
problems that are normally encountered in Bank
work; it is not meant to be exhaustive. The
indicators are grouped according to whether
they are output or impact indicators. More
examples for the same areas as well as for water
management, minerals, fisheries, coastal and
marine resources, solid and hazardous waste,
and toxic chemicals can be found on the
Environmental Economics and Indicators Unit’s
Environmental Economics Series
Web site (http://www-esd.worldbank.org/eei).
Since input indicators are already measured by
Bank projects and are relatively well explored,
they are not listed in the matrix below.
Examples of such indicators are best provided
with a specific project in mind since they are
hard to generalize. (Annex 2 provides some
examples of input indicators for the Lithuania
Siauliai Environment Project. See the main text
for a detailed discussion.)
27
 Matrix of Representative Environmental Performance Indicators
28

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29
Annex 2 —
Examples of the Use of EPIs
in World Bank Projects

— Tables begin on next page —

Environmental Economics Series 31

 A. Lithuania Siauliai Environment Project
32

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Annex 3 —
Other World Bank Performance
Indicators Notes
Baird, M., M. Lav, and D. Wetzel. 1995.
Performance Indicators for Adjustment
Programs: A First Edition Note. World Bank,
Development Economics.
Carvalho, S., and H. White. 1995. Performance
Indicators to Monitor Poverty Reduction.
World Bank, Education and Social Policy
Department.
Fleisig, H., N. Roger, and S. Mahmood. 1995.
Project Performance and Development Impact
Indicators for Projects in Private Sector
Development: A First Edition Note. World
Bank, Private Sector Development
Department.
Gannon, C., and Z. Shalizi. 1995. The Use of
Sectoral and Project Performance Indicators In
Bank-Financed Transport Operations. A First
Edition Note. World Bank, Transportation,
Water & Urban Development Department.
Remy, F., and M. Barry. 1995. The Use of Sectoral
and Project Performance Indicators In Bank-
Financed Industry and Mining Operations. A
First Edition Note. World Bank, Industry and
Energy Department.
Sigurdsson, S., and E. Schweitzer. 1995.
Performance Indicators in Bank-Financed
Education Operations: Second Edition. World
Bank, Human Development Department.
UN Centre for Human Settlements and World
Bank. 1992. The Housing Indicators Program.
Volumes I-IV. New York, UN & Washington,
World Bank.
World Bank. 1995. The Use of Sectoral and Project
Performance Indicators in Bank-Financed
Financial Sector Operations. World Bank,
Financial Sector Development Department.
Environmental Economics Series
_____. 1995. Performance Indicators in Bank-
Financed Agricultural Projects. A First Edition
Note. Washington: World Bank.
_____. 1995. The Use of Sectoral and Project
Performance Indicators In Bank-Financed Oil
and Gas Operations. A First Edition Note.
World Bank, Industry and Energy
Department.
_____. 1995. Sector and Project Performance
Indicators for Population, Health and Nutrition.
First Edition Note. World Bank, Population,
Health and Nutrition Department.
_____. 1995. Power Sector Performance Monitoring
Indicators. First Edition Note. World Bank,
Industry and Energy Department.
_____. 1996. Performance Indicators for Technical
Assistance Operations. A First Edition Note.
World Bank, Operations Policy Department.
_____. 1995. Performance Indicators for the
Telecommunications Sector. First Edition.
World Bank, Industry and Energy
Department.
_____. 1995. Sectoral and Project Performance
Indicators in Bank-Financed Urban
Development Operations. World Bank,
Transportation, Water, and Urban
Development Department.
Yepes, G., and A. Dianderas. 1996. Water &
Wastewater Utilities. Indicators 2nd Edition.
World Bank, Water and Sanitation Division.
For copies of any of these notes, please contact the
World Bank’s Operational Core Services’ Advisory
Service, phone: (202) 458-8627.
35
References
Adriaanse, A. 1993. Environmental Policy
Performance Indicators. The Hague: Ministry
of Housing, Physical Planning and the
Environment.
AGRAF. 1995. Performance Indicators in Bank-
Financed Agricultural Projects. Washington:
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CIAT-World Bank-UNEP. (1998). Indicators of
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CIAT. CIAT-World Bank-UNEP Environmental
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Cropper, M.L., N.B. Simon, A. Alberini, and P.K.
Sharma. 1997. The Health Effects of Air
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Eskeland, G.S., and J. Xie. 1998. Acting Globally
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Hammond, A., A. Adriaanse, E. Rodenburg, D.
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Hamilton, K. 1998. Performance Indicators for
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Hettige, H., P. Martin, M. Singh, and D.
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IPCC. 1994. The Radiative Forcing of Climate
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OECD. 1994. Environmental Indicators. Paris:
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_____. 1997. Environmental Indicators for
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_____. Development Indicators. A working set
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Ostro, Bart. 1994. Estimating the Health Effects of
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Rossing-Feldman, T. 1998. Stocktaking of
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37
Environmental Performance Indicators — A Second Edition Note
World Bank. 1991. The Forest Sector. World Bank
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_____. 1995c. Monitoring and Evaluation
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Global Coordination Division.
_____. 1996a. Performance Monitoring Indicators
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_____. 1996b. Memorandum and Recommendation
of the President of the International
Development Association to the Executive
Directors on a proposed development credit in
the amount of SDR 15 million to the Republic of
Haiti for a Forest and Parks Protection Technical
Assistance Project: Technical Annex.
Washington: World Bank.
_____. 1996c. Staff Appraisal Report. West Bank and
Gaza. Water and Sanitation Services Project in
Gaza. May 30, 1996. Private Sector
Development and Infrastructure Division,
Country Department II, Middle East and
North Africa Region. Washington: World Bank.
_____. 1997a. Monitoring and Evaluation
Guidelines for Biodiversity Projects. Draft.
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_____. 1997b. Project Appraisal Document on a
Proposed Loan in the Amount of FRF 150.0
38
million to the Republic of Tunisia for a Natural
Resources Management Project. April 15, 1997.
Natural Resources and Environment
Division, Maghreb and Iran Department,
Middle East and North Africa Region.
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_____. 1997c. Staff Appraisal Report. Republic of
Tunisia. Greater Tunis Sewerage and Reuse
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_____. 1997d. Staff Appraisal Report. Republic of
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_____. 1998a. “Guidelines for Monitoring and
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_____. 1999. Pollution Prevention and Abatement
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